This blog goes over a scenario where a successful couple heading into retirement sold their business for $35 million. With the proceeds from the sale, the couple is unsure of where to allocate their money. Through an example using permanent life insurance, we illustrate how the couple can protect their estate, grow their wealth, while maintaining more than enough cash flow to use during their retirement.
Have you recently sold your business, or are you planning on selling your business prior to retirement? Are you planning on using the proceeds from the sale of your business to fund your retirement? Will you reinvest the money into the market in search of growth, sit on the money and watch the value decrease as inflation keeps deflating the dollar, or are you looking for something in between? If you are looking for something in between, here is a suggestion.
Consider the example of Michael (65) and Sarah (63). Michael and Sarah have recently sold their farm for $35,000,000. The couple now sit on a lot of cash, but they don’t want the value of their fortune to just evaporate as inflation rises. They prefer to play it safe, while still growing their wealth. Also, they want to pass on a considerable portion of their wealth to their heirs. Michael and Sarah decided to put $24,500,000 of their wealth into a second-to-die indexed universal life insurance policy over the span of 7 years, which allows them the downside protection of a floor (usually 0-2%), all while being able to catch stock market growth up to the announced cap (usually 8-12%). The policy death benefit will also pass on to their heirs tax-free upon their death. First, let’s see what their wealth would have looked like if the couple were passive and did no financial planning with the proceeds from the sale of their farm.